Subdued 2024 for property as rate pain hits home
Poppy Johnston |
Lacklustre growth or even a mild correction in Australia’s housing market has been forecast for 2024 by a key property analyst based on the belief higher interest rates will really start to bite.
SQM Research’s managing director Louis Christopher is tipping the average dwelling price in Australia to grow by as much as three per cent, with the lower end of the base forecast range a one per cent decline.
The analyst’s annual Boom and Bust report had mixed performance across Australia’s big cities pencilled in.
Competitive rental markets and a recovering Chinese economy is expected to underpin another robust year of price growth for Perth and Brisbane housing markets.
But Mr Christopher said mild corrections or more modest gains could be expected across the other major cities, with Canberra facing a fall as steep as eight per cent in 2024.
The analysts’ base case had small falls in Sydney, Melbourne, Canberra and Hobart, and either flat or modest gains in Adelaide and Darwin.
Mr Christopher said still-strong population growth – though softer than in 2023 – plus a weaker pipeline of new builds should keep price falls in single percentage digits.
Nevertheless, with expected slowing employment growth and the corresponding rise in unemployment, tipped to be towards five per cent by the year end 2024, this negative will more than offset another year of strong migration,” he said.
The sharp increases to the cash rate throughout 2022 and 2023 – and possibly 2024 – are also anticipated to put the squeeze on those already paying off a mortgage as well as those hoping to buy.
“Distressed selling activity is expected to jump, especially in NSW where we are already starting to see a new trend upwards in that data set,” he said.
A better year for growth would be driven by ongoing employment growth and another larger-than-expected year for migration.
Homeowners would also need to prove more resilient to sharply rising mortgage repayments than his best guess.
The analyst was tipping sharp increases in the rental market, with Perth expected to record growth anywhere between 12 per cent and 15 per cent.
Housing affordability is expected to intensify though the federal government is trying to boost the supply of homes for low income households.
The details of the $2 billion social housing accelerator program were released by Housing Minister Julie Collins on Monday, with the scheme expected to deliver 4000 homes across the country.AAP